In the context of public goods, what is meant by non-rivalry versus rivalry in consumption? What...

In the context of public goods, what is meant by non-rivalry versus rivalry in consumption? What is meant by non-excludability versus excludability in consumption? Give an example of a commodity that is both non-rival and non-excludable? Could a commodity have one of these properties without the other? What is an open access resource? How does it differ from a private good? How does it differ from a public good? Could private provision of a public good occur? Give an example of how that might come about. If there were private provision of a public good, would the level of that provision be socially optimal? Explain your reasoning. 2 What is the marginal cost of supplying an extra person with a good that is non-rival? If there were private provision of a good that is non-rival, would the amount supplied be socially optimal? Explain your reasoning. (Please type all the answer,do not handwriting, thanks！）

Expert Solution

Non rivalry in consumption: When consumption of a good by one person does not prevent or affect consumption of the good by another person

Rivalry in consumption: When consumption of a good by one person affects and reduces consumption of that goof by another person

Non excludability in consumption: When it is not possible to exclude any individual from consumption of a good

Excludability in consumption: When it is possible to exclude someone from consuming a good, say by imposing fees or high price

Non rival and non excludable commodity: Public good, like atmosphere air, street light, moon light

Yes, a commodity can be either rival or non rival as well as excludable and non excludable

Open access resource: Rival but non excludable resources

Private good: Rival as well as excludable good

Public good: non rival and non excludable good

Private provision of public good will never be optimal because of the non excludable and non rival nature of public goods. This will make the good underproduced (as external benefits of public goods will not be taken into account by private producers)

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A good that is non rival, MC of supplying an extra good is 0

For a non rival good, private provision of good can be optimal, by setting optimal price or fees for the use.

Rahul Sunny answered 8 months ago

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